How can Tesla Motors do battery swapping right when Better Place failed at it? Well, there are some slight technological differences in how the swap is performed, but that’s not what’ll perhaps make Tesla successful at swapping.

The technological differences play only the most minor of roles here. Swapping is swapping.

Recently, Forbes outlined 6 reasons why Tesla is not Better Place when it comes to swapping and we’ve yet to see this laid out more clearly elsewhere.

Below, we’ll highlight those 6 reasons with a condensed version of Forbes’ reasoning. For the full article, follow the link at the bottom of this post.

Better Place was trying to standardize technology across manufacturers; Tesla is serving only itself. Shai Agassi, the charismatic founder of Better Place, convinced the governments of Israel and Denmark that his plan for battery swapping would solve the biggest problem with electric vehicles and got serious commitments from both. But what he couldn’t do was get similar promises from auto manufacturers to use a standardized battery.

Better Place was hoping to profit from battery swapping; for Tesla it could become costly. Tesla, to its advantage, won’t seek to make money from swapping batteries.

Tesla has already achieved a level of acceptance Better Place never had. Musk is basically targeting the next 100,000 with this offering and he just might win them over.

Better Place’s technology was never going to make EVs as good as gasoline cars. The Renault that Better Place offered was another sub-100-mile electric car akin to Nissan’s Leaf. It’s a perfectly legitimate commuter car/second vehicle, but a useless long-hauler. Nothing about Better Place’s swap stations was going to change that.

Tesla builds cars; Better Place leased batteries. This distinction is important for a lot of reasons.

Upgrades? Who wants upgrades? Tesla has teased several times that their design allows for an “upgradeable car”…Musk pointed out that future batteries for Model S (and X) might have larger capacity than today’s 85-kWh design and there’s no reason to doubt that those, too, will be available through swapping.

Which of the 6 points do you agree/disagree with? And will battery swapping actually work for Tesla? Could we consider it to be successful even if Tesla loses money on it?

They are all good points. I think the most important of these is the profitability. Tesla is probably going to write off the cost of battery swapping as a loss necessary to sell cars, much like the supercharger stations. Betterplace was depending on battery swapping to make it money. So this is by far the most important issue.

Another issue to consider is scale. In order to bring betterplace-style battery swapping to the USA you would need to install tens of thousands of swap stations. Tesla is only going to be using these primarily as a means to travel between cities, requiring far fewer stations. The vast majority will still be plugging in for their daily power needs. With the range Tesla offers on their batteries, there really isn’t much need for a battery swap while you are driving around your own city on daily commuting and activities.

I think “necessity” is a major difference. PBP was set up to replace existing gas stations for daily/weekly use. Tesla is more of a convenience option. “Fast or free” are the options. And these will only be needed by those making long trips over 250 miles. Point being, you need a lot less swapping stations for Tesla than you did for PBP, and less batteries at the stations.

Swapping the battery for around $ 60 probably doesn’t bring any profit, since a swapping station costs $ 0.5 million. It would need a lot of swaps per station and for that not enough Tesla’s will be around for some years to come. So indeed it is a ‘cost’.

But if the possibility to swapthe battery in 90 seconds for the price of filling up is seen as a sales argument (to convice those that hesitate) you should make another calculation.

Imagine the profit margin for a Tesla Model S is 10% (Tesla hopes to lift it to 25% eventually, but I stay conservative) and the price is $ 80,000, that means one car brings $ 8000 profit. And imagine the number of swapping stations will be the same as the number of super charging stations (100 in the first several years). 100 x $ 0.5 million = $ 50 million of investments. That pays off if the sales argument (the possibility to ‘fill up’ in 90 seconds) results in at least 6250 extra car sales (model S and X together, 6250 x $ 8000 = $ 50 million). Which is not impossible.

So even if the swapping stations themselves will not be making any money at all, if they help sell 6250 extra cars or more, they are a good investment.

Regarding #2; didn’t Elon actually say they were hoping the revenue from swapping would help pay for the free charging? So to me this would seem like they are looking to make a profit. Also, not sure about the 500K figure, since it’s only 150-300K for the supercharger station, and the swapping stations will be in the same location and probably share a lot of the costs.

I think the final point about being able to easily upgrade is the most important. Tesla seems to always want to keep moving forward making better and better cars and want to do it as quickly and efficiently as possible. It shows that they are not only looking at immediate benefits but also other benefits down the road.

Thats what I’m betting on – future packs for the Model S/X will fit the same size format, at least until the second generation in 2018-19. I wouldn’t be surprised if the 2nd gen S/X models and the cheaper models in 2017 have the same form factor as well (the S/X models would have higher energy dense batteries to go 300+ miles, while the smaller car would have slightly less energy dense batteries to go 200-250 miles).

As batteries become more energy dense, they may be able to shorten the wheelbase around a third, and still have a vehicle light enough that it could provide 200 miles of range in the next 3-4 years. The company would save money by leveraging the new gen III platform for both the new Roadster and all upcoming “BlueStar” vehicles (coupe, convertible, mini-wagon, small pickup truck, etc.). Many vehicles; yet they basically only support two BEV platforms to build them all on.

Tesla would need to refresh the current platform the S & X both use, around that time frame, as well.

Swapping different length packs than the current Model S size – won’t be that hard – since Tesla Makes the Robots that do the swap – from the robots than install the batteries at the factory. It could be a flexible design with multiple tool points, and with WiFi communication – the car would tell the swap station – ‘I am the little car – not the big one – please adjust for me!’

Forbes cites 6 good reasons that Tesla and Better Place are not “apples to apples”, but the biggest reason by far is only hinted at by #5.

Tesla set out to create a new, transformative and disruptive consumer product, start to finish. They essentially make everything – from the concept through the engineering through the high-volume manufacturing to marketing, branding and sales. They believe in the electric car, and believe they can deliver an EV that’s better for consumers and society than any ICE car. Seems like they can already be declared a success. And for them, battery-swapping is just another feature they are going to play with, in order to fine-tune their user experience and marketing.

On the other hand:
Agassi and BP had also set out to be transformative and disruptive, and hoped to cash out handsomely on the EV revolution. But they chose the shortcut one end by “outsourcing” or contracting out all the heavy lifting of product design and engineering. This much is known, and mentioned by Forbes as well.
What has remained unknown outside Israel, is that BP also tried to shortcut the other (marketing) end by setting up their pilot in Israel – a place where consumers are totally not ready for EVs. They weren’t banking on the individual buyer. Instead, they used government backing to exclude any EV/plug-in competition (at their request the Israeli government has outlawed trickle charging), and hoped to leverage 800-pound-gorilla corporate power (their main investor) to get fleet managers of other large companies to buy their vehicles en masse (due to high vehicle cost-of-ownership, roughly half of Israel’s car sales are fleet leases as benefits for employees).

The only tangible “product” they had to design therefore, was the network of switchable-battery stations. And they bungled this one badly. Simple arithmetic from their financial reports indicated that the true station cost was at least 4x the half-million that’s always quoted (yes, over $2 million a pop). And they built the entire network nearly simultaneously, burning through their cash reserves before securing a single fleet lease deal.

Though Tesla’s accomplishment here is impressive, I suspect that few Tesla customers will actually utilize the battery swapping feature, so later Tesla will eventually discontinue the service. Much like they discontinued the low-end Model S due to lack of interest. Instead they will use that money to build out their charging infrastructure, or whatever else gives their customers more bang for the buck. In the mean time, it’s a great marketing tool as it destroys one more popular criticism of EV technology … the refuel time.

BP failed because they didn’t understand the CORE product they were selling!….(BATTERY)

Let me explain….. “they failed to get all manufacturers to agree to one standard”. No manufacturer will accept that. In a world of EVs the battery is a core INTELLECTUAL PROPERTY.
How its put together.. heating/cooling..& how it affects and changes the driving dynamics of the drive-train. Let me repeat….no manufacturer will ACCEPT that… why because that is where each company DIFFERANCIATES itself from another. In the ICE world its like asking all manufacturers to accept to one type of engine/ transmission type. That’s not gonna happen.
And even if it did…then why would you buy a BMW instead of a KIA.

I’m betting Musk begins to lease his proprietary tech, but in a grander fashion than the RAV4EV, where other cars will begin using his swap station and Superchargers, but not until Tesla builds out both in sufficient quantities. No one else is close to an 85kW battery, or even the 40kW battery of the defunct base model. The stripped Model S in their showroom is a car designer’s dream, with almost nothing in the way of any kind of body you could dream up. It’s so incredibly elegant, and it’s a heck of a battery design to sell to other manufacturers.

I think you all miss the point, except maybe open-mind. The point here is that EVs are superior to ICE cars in every way except one, recharge time, so by sidestepping that Tesla can now claim 100% superiority! Never mind that the swap stations will seldom be used, Paul touched on it in his comment, the swap station is a brillant marketing tool! Tesla wins again!

Tesla’s Charger Rates are increasing Steadily too – from the first Tesla Roadster Connectors / EV Chargers for Home use, to the HPWC units; and in the Superchargers starting at 90 kW and within a very short time (under a year) going up to 120 kW. By the time the whole supercharging network is in place – they might even be bumping up to 150 kW – if not all – in high use areas, maybe even higher – if their materials can handle the heat requirements.

I suspect that the swapping times will have a steady speed improvement too, at a step rate of 5 – 10 seconds faster per improvement cycle – and they might only reveal that they have improved them by demoing after they have got the swap down by 15 seconds – taking the 90 seconds down to first 75 seconds – and later – down to 60 seconds!

Think garage mechanic changing tires versus Indy Pit crews – it all takes refinement to get all the team working in sync! I am of the opinion that Tesla’s Tech Crews are also ‘refining’ their processes steadily!

Just look at the Cells they started the Roadster Prototype with – No Supplier Contracts, No Favored deals – just a big purchase of the cells at retail (even before Elon came on board), and at lower energy densities than they use now in the Model S. In the 1,800 mAh to 2,200 mAh range when they began, and now anyone can go out and buy – if they have the $$ – the 3,400 mAh Cells – of the same dimensions! My guess is the 3,100 mAh cell is the base capacity in the Model S. Panasonic is also on plan to deliver the 4,000 mAh Cells – which Tesla will likely get early test sets to work up their packs initial numbers from.